How Indian buyers can pay for property in UAE without breaking the rules

Dubai: Dubai’s real estate market has long been a magnet for Indian buyers, whether it’s for investment, a holiday home, or a step toward relocation.

Indian investors make up the largest group of foreign real estate investment in the UAE and that continues to rise year-on-year due to the UAE’s favourable tax-free environment, excellent infrastructure and its Golden visas offering.

However, recently, India’s Income Tax department and Enforcement Directorate (ED) have started to take notice of the increase in investment in the UAE and have warned Indian investors to ensure that they are only using the proper channels to invest in these properties.

The rising levely of scruntiny coupled with recent regulatory changes in the UAE, mean that prospective buyers need to tread carefully, especially when it comes to making initial payments.

The UAE Central Bank’s February ruling that banks can no longer finance Dubai Land Department fees or broker commissions via mortgages has shifted more upfront cost onto buyers. This comes on top of the minimum 20% down payment for expatriates (30% for higher-value properties) and an extra 6–7% to cover transfer fees, trustee charges, and agent commissions.

For Indian buyers, the challenge isn’t just about having enough liquidity, it’s also about ensuring the money is moved across borders in a compliant manner.

Under India’s Foreign Exchange Management Act (FEMA), resident Indians are prohibited from using credit cards for capital account transactions, which includes overseas property purchases. Even a small booking amount paid on a credit card issued by an Indian bank could breach the rules.

The Liberalised Remittance Scheme (LRS) provides a clear legal route, allowing residents to remit up to $250,000 per financial year for such investments, but only if payments go through authorised banking channels.

The temptation to swipe a credit card, especially for off-plan bookings or quick deals, is understandable. But international cards bypass the documentation and oversight required by the Reserve Bank of India (RBI), making them non-compliant. What might have seemed harmless a few years ago is now firmly on regulators’ radar as cross-border scrutiny intensifies.

Beyond payment methods, Indian investors should keep an eye on several compliance points: structuring payments to stay within the $250,000 annual cap, correctly documenting the remittance purpose, reporting overseas assets in Indian tax returns, and avoiding informal payment channels. In many cases, regulatory trouble stems not from the property transaction itself, but from the way funds are transferred.

For visiting Indians or NRIs, the landscape has changed. Token amounts once paid casually via cards may now raise compliance flags. The safest route is an LRS-compliant wire transfer from an Indian bank to the developer’s escrow account, something most Dubai developers are now accustomed to handling seamlessly.

Dubai continues to offer unmatched real estate opportunities for Indian buyers, but the days of quick, casual payments are over. In this climate, awareness, proper structuring, and adherence to both Indian and UAE rules aren’t just formalities, they’re essential for protecting your investment and keeping it trouble-free.

- The writer is CEO at Under One Roof Real Estate